France’s competition watchdog on Monday fined Apple 1.1 billion euros ($1.23 billion) for anti-competitive behavior in its distribution network and an abuse of economic dependence on its resellers, reports Reuters.
At the same time, France’s Competition Authority also levied fines of $84.7 million and $69 million against Apple wholesalers Tech Data and Ingram Micro for their roles in the anti-competitive practices.
In announcing its largest ever fine, the Competition Authority’s president, Isabelle de Silva, gave a statement summarizing the findings of its investigation that led to the decision, an English machine language translation of which follows:
“During this case, the Authority deciphered the very specific practices that had been implemented by Apple for the distribution of its products in France (excluding iPhones), such as the iPad. First, Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products. Secondly, so-called Premium distributors could not risk promoting or lowering prices without risk, which led to an alignment of retail prices between Apple’s integrated distributors and independent Premium distributors.
“Finally, Apple has abused the economic dependence of these Premium distributors on it, by subjecting them to unfair and unfavorable commercial conditions compared to its network of integrated distributors. In view of the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers, the Authority has imposed the highest penalty ever pronounced in a case (1.24 billion euros). It is also the heaviest sanction pronounced against an economic player, in this case Apple (1.1 billion euros), whose extraordinary dimension has been duly taken into account. Finally, the Authority considered that, in the present case, Apple had committed an abuse of economic dependence on its premium retailers, a practice which the Authority considers to be particularly serious.
“Apple and its two wholesalers have agreed not to compete with each other and to prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products,” it said.
According to the French anti-trust agency, the case originally opened after a dispute between Apple and one of its leading French wholesalers, eBizcuss. The premium reseller accused Apple of abusing its position and in 2012 it shut down in France as a result of what it claimed was unfair competition.
A spokesperson for Apple told CNBC:
“The French Competition Authority’s decision is disheartening. It relates to practices from over a decade ago and discards thirty years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries. We strongly disagree with them and plan to appeal.”
Apple in its October earnings call said that France’s competition authority had alleged that some aspects of its sales and distribution practices were in violation of French law, but did not provide details on which aspects of its business were under investigation.
Apple earlier this year was fined 25 million euros by French consumer fraud group DGCCRF for intentionally slowing down iPhone 6, iPhone SE, and iPhone 7 models with the power management software that was meant to prevent older iPhones with degraded batteries from shutting down during times of peak power usage.